Good afternoon. I'm Neal E. Schmale, and I'm Non-Executive Chairman of the Board of WD-40 Company. On behalf of the board of directors and our employees, I want to welcome you and our webcast audience to WD-40 Company's 2015 annual meeting of stockholders. We will now officially start the meeting by presenting the affidavit of mailing notice of the meeting. Would the secretary please present the affidavit of mailing notice of the meeting?
Mr. Chairman, I have the signed affidavit of mailing, I'm pleased to announce proper notice has been given.
Thank you. It appears that notice of the meeting has been properly given. Would the secretary please confirm the presence of a quorum?
Mr. Chairman, there are at least 13,051,000 shares represented in person or by proxy constituting a quorum.
Oh, thank you. I now call the meeting to order. Following my opening remarks, Garry Ridge, the company's CEO, and Jay Rembolt, the company's CFO, will discuss WD-40 Company's 2015 performance and the strategic outlook for our company. Following these presentations, we will introduce the three matters to be acted upon by stockholder vote at today's meeting. The three matters for consideration are the election of Directors, an advisory vote to approve executive compensation, and the ratification of the selection of our independent auditors. Now I'm pleased to introduce the other members of our board of Directors, and would each Director please stand as I call your name? Giles H. Bateman. Mr. Bateman is one of the co-founders of Price Club and served as a Director and Chief Financial Officer until 1991. He has been a Director since 2003 and is the Chair of WD-40's Audit Committee. Peter D.
Bewley served as Senior Vice President, General Counsel, and Corporate Secretary of The Clorox Company from 1998 to 2005. He has been a Director since 2005 and is Chairman of our Corporate Governance Committee. Melissa Claassen is Vice President, Business Unit Finance of adidas, headquartered in Germany. Ms. Claassen joined us as a Director in March of this year. Richard A. Collato is the former President and Chief Executive Officer of the YMCA of San Diego County. He has been a Director since 2003 and is the Chair of our Compensation Committee. Mario L. Crivello has been a Director since 1994. His father, Sam Crivello, was a co-founder of the company. Mr. Crivello is retired, having been the managing owner and master of tuna purse seiners. Linda A. Lang is the former Chairman and CEO of Jack in the Box Inc. She has been a Director since 2004.
Ms. Lang is the Chair of our Finance Committee. Gregory A. Sandfort is President and Chief Executive Officer of Tractor Supply Company. He has been a Director since 2011. Garry O. Ridge is the President and Chief Executive Officer of WD-40 Company. He has been employed by the company since 1987 and has been a Director since 1997. On behalf of the board of Directors and all the employees of WD-40 Company, I'm pleased to report that in fiscal year 2015, the company delivered another year of solid progress. There's something I say every year, and I repeat it because it's important. On behalf of the board, I would say that the board of Directors of WD-40 Company is dedicated to providing its collective knowledge, experience, and guidance under the highest corporate governance standards to ensure that we continue to grow a great company.
I know that I speak for the board when I say that I'm proud to be associated with this company. As Chairman of the Board, it is once again my pleasure to introduce the Chief Executive Officer, Garry Ridge, who will talk about the company's fiscal year 2015 performance and where the company is headed in 2016 with its strategic initiatives. Garry?
Thank you, Neal. Good afternoon, everyone. A special welcome to our shareholders that are here today in the audience, to those that are listening to us and participating over the webcast, to our many tribe members all around the world that are listening to this presentation today, whether they be in Shanghai or in London or anywhere else in the world. We thank them for what they do. They're just a magnificent group of people that get up every day and do wonderful work for themselves and our shareholders. What I'd like to do is take you through our presentation. Firstly, I remind you of our safe harbor statement. If you haven't read it, please do. It shares with you that we are sharing information that may be uncertain of reality into the future. It is good as it is today.
Let's talk for a minute about who we are as a company. Simply, we look at ourselves as an easy-to-understand business, a business that's dominating in its industry, that has superior returns on capital, that has a substantial competitive advantage, that generates significant cash flow, that has a strong balance sheet. Importantly, we have growth opportunities. We've got a proven management team. What is beautiful is to remember where we came from. Right here in San Diego in 1953, not far from here, in probably a bathtub, we mixed up a formula 39 times. The 40th time it worked. Born was WD-40 formula. Today, in 176 countries around the world, the sun never sets on WD-40.
The most exciting thing I can tell you today is today, somewhere in the world, and probably in China, someone met the blue and yellow can with a little red top for the very first time. That's really what our growth is all about. Today, our business is broken into two segments. The core segment being, of course, our multipurpose maintenance products. About 85% of our business is in the brands of WD-40, 3-IN-ONE, GT85, WD-40 Specialist, and WD-40 BIKE. We have another segment of our business, our home care and cleaning products, which is a stable business that we continue to maintain. It generates significant cash flow and is a business that helps support our R&D and other efforts around the world. More importantly, I think, is our business model. The things that we care about the most, our people, our products.
We're passionate. We have a purpose. We're in the memories business. Our vision is to create positive, lasting memories by solving problems in factories, homes, and workshops of the world. We put a business model together to give our people freedom, to take them from fear to freedom, to enable them to go to work every day, enjoy what they're doing, and make a difference. It's based on a simple model, a clear vision, a compelling set of values, understanding that planning and execution can cause you to get in what we call the typhoon zone. That's something you've got to come out of. You come out of that, you review, you debrief. As I've said for many years, we don't make mistakes. We have learning moments. I never lose. I only win or learn.
After that, we align that with our vision to go forward. The other thing we're dedicated to, of course, is to helping our people step into the new version of their best personal self every day, and we do that through development of our people in many ways across the company. As I shared with you, we have a clear vision, then we have a set of values that help our people make decisions every day. The number one value, of course, is we value doing the right thing, and that's pretty clear to understand. We also value creating memories, making things better than they are today, excelling as individuals while we thrive as a tribe. We value adding to the WD-40 economy, and that's really the growth of our profitability.
The thing that we've come to really understand in the past few years is our circle of competence. I love this quote from Warren Buffett, who basically says, "It's really important to know what you're good at, but more importantly, to know what you're not good at." It doesn't really matter how big or small that circle is, but you know where the perimeter is. Today, through many learning moments, we really do know what we're not very good at, but we do know what we're good at. Our circle of competency is based around four things. The center of it, of course, is the power of the shield, the WD-40 shield that has proven to be reliable over many years. We see our competency in four areas, our culture, our globalism, our unique distribution, and the clear understanding of our end users.
We call that the power of the shield. If we look at our culture, one thing we're very proud of is our employee engagement. It's kind of a pet hobby of mine that I think every day it's really disgusting that 70% of people get up and go to work around the world and hate what they're doing and hate where they're going. I'm not sure how wonderful things happen when that happens. What I'm really proud of is 99% of our people know how their job, the things that they do every day, feeds into the performance of the company. 97% of our people say they love, not like, they love to work at WD-40 Company, and 96% of our people say they're excited about our future.
I'll submit to you, if you know how your work is moving towards a purpose and you like where you work and the people you like with, and you're excited about the future, wonderful things can happen. We're really proud of that. Our global infrastructure. We're in 176 countries around the world. There were 228 countries at our last count. As I said, this huge global opportunity that we have was part of our dream 20 years ago to take the blue and yellow can to the world. Our global infrastructure also is based on helping people first know our product, but then making it easy for them to buy. We make it easy for them to buy by making it available in multiple trade channels.
Within five-mile radius of this building, you can buy WD-40 in a hardware store, in an auto store, you can buy it in a grocery store or a drugstore. You could get it at Fastenal, or you could get it at a farm supply store. We don't care where you shop. We will be there. Three questions we ask Do you need me? Do you know me? Can you buy me? Our distribution system is unique. It's different to other organizations. This slide really shows you the difference. Most companies have a bunch of products under a brand that they sell through one trade channel. If you were looking for an Acme tool this afternoon, if you didn't go into a trade channel that Acme Tools was dominant in, you probably wouldn't have an interaction with an Acme tool. At WD-40, we turned that funnel upside down.
We broke the first rule of marketing. We unpositioned the distribution. WD-40 is our brand, and you can buy it in multiple trade channels. We're going to make it easy for you to buy. Another competency is our end users. The guy sitting on the patio drinking a beer on a Sunday probably uses about $0.40 worth of WD-40 a year. We love that guy or that girl. This morning at Home Depot in the U.S. or Bauhaus in Germany or Bunnings in Australia or at B&Q in the U.K., there were people with pickup trucks and utes picking up their stuff to go to work today to do work in our homes and factories. They could be using anything up to $70 worth of WD-40 a year. Those are the ones we love. Those are the ones we talk to a lot.
Those are the ones we encourage. The important thing is knowing that in the world, we have a few things. We have time, we have talent, we have treasure, and we have technology. None of those are abundant. It's really important for us as an organization to help our people focus those very treasured resources where we see the biggest opportunities, and that's why we have some very clear strategic initiatives. Our number one strategic initiative is what I've been sharing with you already. We get up every day to make the little blue and yellow can easy to buy, to have more people use it in more places more often. We have a long way to go. Our target with that is to double our WD-40 blue and yellow can business over the next 10 years.
Once we've established the power of the shield, we then go out to establish our new relationships with our WD-40 Specialist product line. We believe it can be 25% of the multi-use products business over time. Our third strategic driver is to use that knowledge and that trade channel information to build other brands or products around it, like our WD-40 BIKE products, like our 3-IN-ONE brand. The next thing we need to do, this should be the number one strategic driver, is we need to attract, retain, and develop magnificent tribe members, because without our people, we're nothing. I get up every morning and I think mainly about two things in our company, our people and our brand. If we can continue to strengthen both of those, we will be successful. Finally, operational excellence.
It's a bit of a buzzword, but what does it really mean? What it means for us is protecting our brand and its intellectual property around the world. Over time, increasing our efficiencies in supply chain, making sure that we're aware of and in line with the many new regulatory compliances there are all around the world, building the strength of our quality control and our quality teams to make sure that the customer is getting what we promised them. These are the things that we basically work on every day. Our latest innovation is something really exciting. We launched our latest innovation, EZ-Reach, just a few months ago. It's already showing to be one of our future stars. EZ-Reach is the old blue and yellow can with the red top, but now we've made it easier to use.
It's applying our goal of having more people, those heavy users, use it more often. Now the guy who's down at the automotive workshop right now trying to remove a muffler from a car with a seized nut that's behind the exhaust pipe, he can get WD-40 right to that spot by turning that flexible tube and spraying it. A wonderful innovation. The other thing that we've been doing that is really great is called category leadership. We work with many distribution points and retailers around the world. They're in the real estate business. Their job is to get the maximum net return they can from that real estate that they have where their customers are coming to shop. We're spending millions of dollars really understanding what the needs of that customer are.
We know in major retailers that when customers go into the section where our products are sold, they probably spend a maximum of 72 seconds in front of that gondola. About 42% of them walk away without making a purchase. We can take that information to our retailers and distributors and share that with them. Not only do we share it with them, we share the solution by helping them understand what the best assortment of products should be on the shelf. We call that category leadership. You can see that over time, how our category leadership has shown the dominance that we have of our brand. Then, again, category leadership with our EZ-Reach. There's the display that went out on stores. It's very important that as we leverage the trust we have in the shield, we do it very deliberately.
We're not going to be whacking the WD-40 brand on just about anything. First, we ask the question, what is the memory that that product will deliver, and is it positive? We've identified that our end users have told us that there are four main areas where they trust us more than anywhere else. They're metal cleaning, lubricating, water displacing, and protection. Our end users have told us that if we bring them products with the shield on it in those categories, they'll try us and they'll trust us. This is our roadmap of where we will go. From those platforms, we drop down into what we call categories. Already in our Specialist range, we've launched three major categories. Our general maintenance products category, which is the main one that we launched in the U.S.
Specialist product has gone from zero to $20 million of revenue in just four short years, on our way to $125 million one day into the future. We launched the WD-40 Specialist motorbike range in Europe. We trialed and launched the WD-40 Specialist Lawn & Garden in Australia. As we learn from these, we decide which geographic areas to take them to. We've got other categories going forward. How does this simply look? Well, here's how it looks. In 2006, there we were, $191 million, just primarily the WD-40 brand. In 2015, we're up over $300 and some million, with growing the WD-40 brand by $100 million in 10 years. During that time, we built up a global infrastructure with hundreds of people around the world that get up every day to make our product aware and make it easy to buy.
What are we going to do for the next 10 years? Exactly the same thing we did in the last 10 years. We're going to make WD-40 aware to more people, and we're going to make it easier for them to buy in 176 countries of the world, which should take us to an organization with revenues somewhere in the vicinity of $700 million. Do we know what we need to do? We need to just get up and do it every day. That's an overview of our strategy and what we think about every day. It's my pleasure to introduce Jay Rembolt, our CFO. He's going to give you the background of the numbers stuff, the really exciting stuff, I guess. Jay. Oh, what happened here? There you go.
Well, thanks, Garry. It's certainly my pleasure to go over some of the numbers. I think the numbers we'll look at first, I think are ones that are quite exciting, and I think we'll all appreciate just what's happened here as we review the performance of our investment or of your investment in the WD-40 Company over the last couple of years. This chart is a comparison of the total shareholder return for the WD-40 Company, which is outlined, which is the dark blue line, and the S&P 500 and the Russell 2000. You can see that $100 invested in 2010 would now have generated a value of $265 by August of 2015. Very solid performance over a fairly long period of time. Really, it's up to us to really help understand what's driving that performance.
If you think about investment performance, it's really driven by expectations of future earnings. What is the company going to be doing? What are the earnings going to be into the future? If we look at, for us, what are some of the key things that help drive future earnings? Part of it is, do we have enough resources to execute on our strategic initiatives? A lot of that comes from our strong balance sheet. We have our cash and our debt are nearly at par. We have predictable cash flow, about $50 million a year in free cash flow. That's really over and above what we need to run the business. From a standpoint of resources, we have the resources we need to invest in our strategic initiatives.
The next piece is to look and say, "Well, what sort of efficiency can we gain out of our business model? Do we direct those business resources to the key drivers of value?" For us, that's building our brands and our markets. If you look at the makeup of our employee base, of the 433 tribe members, the vast majority of them are focused every day in markets around the world, making our customers aware of our products and making our products easy to buy. Our focus of our business model is to ensure that we continue that activity. Another aspect of our business that is very important for future earnings is our invested capital. When we invest our capital, do we get a decent return? Are we able to have returns that are greater than our cost of capital?
If you look, last year, we achieved a 27% return on invested capital, and over the last five years, our return on invested capital has averaged 25%. That's far over the target we have of 20%. Then, as Garry pointed out, really the last piece is the future growth. What are the opportunities for us in the future, and what does that look like? Garry did a great job of sharing on a revenue side where our growth is going to come from. This next slide just takes a look back and shows what we've done over the last 10 years, where growth has come from. Really, I think the aspect of this slide is to show that the diversity of our business can weather an incredible amount of economic disturbance in one or two or three or even the whole world.
We're not a recession-proof company, but we certainly seem to be very recession-resistant. One of the keys that we use when we manage our business is what we call the 55-30-25 rule. You may remember it used to be the 50-30-20 rule. We've changed that as we've been able to see that in our future, that we're going to be able to achieve a 55% gross margin. If we kind of refresh the model, 55, that stands for our gross margin. We target a gross margin of 55%. Our cost of doing business, that's everything else, represents the 30 in that model, leaving us with a residual EBITDA of 25%. What are the key factors? The gross margin of 55. You can see back in FY 2013, we were at 51%. Before then, we were below 50%.
We've now increased it to 53 this last year and expect it to go higher this year. The key areas for us in driving that gross margin are product development, new product introductions and innovation, operational efficiencies, as well as product mix and market mix. We do have pricing adjustments and have taken pricing in the past, but that's really basically the reason that we do that is simply to recover our cost structure. If we have increases in our input costs, we'll use pricing to recover that. Here's a look at the breakdown of a cost of a can. This is a recent look, and you can see, I think you can see. I guess you can't see very. This is about 34% in the petroleum-based products. Last year at this time, it was 40%.
40% of the cost of a can was made up of petroleum products last year. As a result of the change in price of oil over the last year, that now represents only 34% of the cost of our can. About 4% of the total can is input costs that are directly tied to oil. When oil goes up, those costs go up, and when oil goes down, that 4% goes down and shrinks even more. A look at our cost of doing business. The key aspect of this is that the three areas where 75% of our costs are in our tribe members, freight, the investments we make in getting our products to our customers, the investments we make in our marketing expenditures, making our customers and consumers aware of our products.
We have additional investments in research and development, new product innovation. At the current year, in 2015, we were at 34% of our cost of doing business. You remember our target was 30%. We see that we'll reach that target over time as revenues grow. We've been having additional investments in things like regulatory, quality, research and development that we would continue to make, but just not at the levels that we're currently at. Here's how we've progressed on the 55-30-20 rule over time. You can see that we've made great progress over the last few years, but we still have a ways to go. A word about how we think about capital allocation. Our first step is to really look at our long-term growth expectations and return targets. We target annual revenue growth of 6%-8%.
We see that our return on invested capital should be over 20%. We look and determine what sort of liquidity and cash needs that we have. We certainly have adequate borrowing capability on our line of credit. Our next step is to look at our capital expenditures and other regular dividends. We target our regular dividend payout to be in the range of about 50% of our earnings, and we have capital expenditure needs between $3 million-$5 million a year. That leaves really the excess to be invested at the highest return alternatives. That could be continued investment in the business, could be acquisitions or share repurchases. This last year, we did all three. We increased our investment in our research and development.
We made an acquisition of the GT85 brand, the bicycle brand in the U.K., and we acquired $30 million worth of our shares in share repurchases over the year. Just as we look at our recent history of our returns to shareholders, you can see that we've had steady increases in dividends. As a matter of fact, some of you may know that today our board of directors, when they were approving the annual quarterly dividend or the quarterly dividend, raised it from $0.38 to $0.42. A 10.5% increase in the dividend, which is consistent with the dividend increases we've seen over the last five years. We've also continued to repurchase shares over that same period of time, and we've repurchased anywhere between $30 million-$40 million a year. We will continue to act in that same manner as we go forward.
We have a $75 million share repurchase plan that continues through the end of August. Just to look at our 2015 financial results. You can see our top-line growth, our revenue growth was challenged in 2015. The driver of that primarily was a result of foreign exchange. The strong dollar had a very big impact on our revenues when converted back into U.S. dollars. Because of the improvement in gross margin, we were able to show income growth as well as EPS growth. Just to digress a little bit and just talk about currency and the impact currency has on us. There's three concepts that we'll talk about. The first one is reporting currency. That would be the U.S. dollar for us as a U.S. company and a U.S. corporation reporting. The second is functional currency. We have subsidiaries in the U.K., China, Australia, Canada.
They sell in a local currency and report and have their books in a local currency. That, for them, is their functional currency. We also have an opportunity where I have a functional currency, but I'm selling in a currency that's different than that. An example of that is in our U.K. subsidiary, which does business throughout Europe. It sells in euros, and it sells in sterling, and it also sells in dollars. Those sales in their non-functional currency are called their transaction currency. What we have here, as we convert or translate the functional currency books and records of our international subsidiaries to the U.S. dollar, we have a potential for a translation impact.
That is when currencies are different in a prior period than they are this period, you can have either a gain or a loss depending on the changes in that currency. We also have an impact when having sales in our transaction currencies and then having to convert them or translate them into our functional currency. For example, as the euro gets converted to the sterling, then gets translated to the U.S. dollar, we face currency risk, potentially currency benefit. If we look at what happened in this last year, just with respect to those, our reported results, $378 million. However, if currencies had remained the same as they were in FY 2014, the prior year, we would not have had a translation impact, and we would not have had this transaction impact. The revenues would've been $16 million higher.
In times of volatile currencies, we are exposed to this risk. Sometimes it plays in our favor, sometimes it doesn't, but it's something to keep in mind as we look forward and look into the future, because over 40% of our revenues are generated in currencies outside the U.S. dollar. Just a quick look at our final thoughts. What did you hear from us today? You heard that we have a long history. We have a very simple and easy-to-understand business model. We have a clear understanding of our circle of competence. We have a long runway of growth driven by our strategic initiatives. We have superior returns on invested capital. You heard that our business model helps align our organization around our strategic initiatives. We generate significant cash flow, and we have a clear capital allocation strategy.
Our sales growth was challenged. We were able to grow EPS by 6%. Taking all that into account, I think we do meet that definition of a good business that Garry showed on his first slide. With that, I want to thank you and thank our tribe for another outstanding year and phenomenal results by all. I'll now take this time to turn it over to our chairman. Thank you.
Thanks, Jay. It takes a lot of courage to explain the impact on the accounting statements of currency gains and losses, so I'm proud of you for taking that project on, Jay. There are three matters to be voted on at today's meeting, as presented in the proxy statement delivered to stockholders with the notice of annual meeting. If there's anyone present that has not had an opportunity to vote or who wishes to change their vote, you may execute a ballot at the registration table at this time. There are nine seats to be filled upon the election of directors. The nominees for election as directors were nominated in accordance with Article two, Section fifteen of the company's bylaws. The nominees, consisting of nine incumbent members of the board of directors, are identified in the proxy statement.
Would the secretary please confirm that the nominees for election as directors have been elected?
Pleased to announce that at least 10,666,000 shares have been voted for the election of each of the nominees as directors.
Thank you. The stockholders have been asked to cast an advisory vote to approve the compensation of the company's named executive officers identified in the compensation discussion and analysis section of the proxy statement. This vote is commonly referred to as the say on pay vote. Would the secretary please confirm that the stockholders have approved this advisory vote to approve executive compensation?
I'm pleased to announce that at least 10,690,000 shares have been voted for the advisory vote to approve executive compensation.
Thank you. The stockholders have been asked to ratify the audit committee selection of PricewaterhouseCoopers, LLP, as the company's independent accountants for the next fiscal year. A representative of PricewaterhouseCoopers is present and has been offered the opportunity to make a statement and can respond to any appropriate questions. Would the secretary please confirm that the selection of PricewaterhouseCoopers, LLP, has been ratified?
I'm pleased to announce that at least 12,978,000 shares were voted for ratification of the selection of PricewaterhouseCoopers, LLP as the company's independent accountants for the current fiscal year.
Thank you. This concludes the formal business portion of our meeting, and this will also conclude our webcast for the annual meeting. I'd like to thank our stockholders for their continued support, and we'd also like to thank our webcast audience for joining us for the 2015 annual stockholders meeting.